Saudi Aramco is expected to tell European term customers they will receive no Saudi crude in October, as damage to the kingdom’s East-West pipeline disrupts supplies to the region.
At least two European refiners were reportedly informed their October allocations would be zero, with the decision understood to apply across European term buyers, reports OilPrice.com.
While Saudi Aramco seems to have found a way to move some of the crude that was stranded by the East-West pipeline, Europe is on the wrong side of the workaround.
The pipeline previously transported four to five million barrels of oil a day to Yanbu on Saudi Arabia’s Red Sea coast, allowing crude to bypass the Strait of Hormuz and reach European markets.
Following the disruption, Saudi Arabia has begun moving around 60 million barrels from its Persian Gulf export terminal at Ras Tanura. However, the additional supplies are being directed towards Asian buyers including China, South Korea, India and Japan.
European refiners face tighter supply options, with alternative Gulf shipments requiring passage through the Strait of Hormuz and the Red Sea, or longer journeys around Africa.
The disruption has added pressure to European crude markets as refiners seek alternative supplies.
